Spirent looks to Asia for revenue gains

Updated: 2011-10-13 07:49

By Chen Limin (China Daily)

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BEIJING - Spirent Communications PLC, the maker of network testing equipment, expects half of its revenues will come from the Asia-Pacific region within five years as the popularization of smartphones and updates of telecommunications networks boost demand.

The region, in which China is the biggest market, has been "growing very significantly over the past six to seven years", Eric Hutchinson, chief financial officer of the London-listed company, said during a visit to China this week.

The Asia-Pacific region accounts for 34 percent of Spirent's total business, second to the United States, which accounts for about 50 percent.

The company plans to expand its research and development (R&D) center in China in the coming years to further fuel growth, said William Burns, chief executive officer.

Staffing at the Chinese center, the second-biggest after one located in California, has grown by 40 percent year-on-year this year to more than 200 people.

Burns said he expected the Chinese R&D center would become the company's largest out of eight sites worldwide over the next six months.

He said the growth of mobile Internet services, cloud computing and fourth-generation (4G) network development and deployment in China have provided opportunities for network testing companies.

The company tests mobile devices and wireless networking equipment.

"We expect over the next 12 to 18 months for the TD-LTE (handset) market to truly evolve into a need for test solutions; we don't see that need yet today," said Burns.

He commented in reference to the international 4G standard developed and promoted by the world's largest mobile carrier China Mobile Communications Co, which it calls TD-LTE.

In China, the government has not given official approval for a large-scale commercial deployment of 4G networks.

Earlier this year, Miao Wei, the minister of industry and information technology, said the country plans to adopt the commercial use of 4G technology "in three to five years".

However, chip makers, mobile network manufacturers, together with other players in the industry chain, have been preparing for the 4G commercial roll-out.

Burns added that China's aggressive investment in a smart grid is also an opportunity for network testing companies, although it might not be as big a market as mobile network testing in the near future.

Agilent Technologies Inc, Rohde-Schwarz and Spirent are major players in China's network testing industry, especially for the high-end sector, where domestic players don't have a big presence, according to Yu Zhaojun, an analyst with research company Frost & Sullivan.

The communications test equipment market in the Asia-Pacific region is forecast to expand at a compound annual growth rate of 8.4 percent through 2017.

Overall revenues are set to reach $643.5 million by 2017, according to the research company.